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For years it was a secret, but Leslie Tullis – a formerly closeted video-game geek – says she can now speak openly about her obsession. She grew up on Nintendo and Super Nintendo. In college she played World of Warcraft. She’s been a SimCity fan for nearly 20 years and is an expert at Portal and Civilization.

As an MBA student at the Wharton School at the University of Pennsylvania, she was drawn to a new course on gamification – about the application of video-game elements to engage customers and employees.

“The course was about taking stuff from video games and saying, ‘this works on gamer geeks but it also works in other environments, too’,” says Ms Tullis, a former investment banker who graduated last year and now works as a video-game strategist in the San Francisco Bay Area.

The term gamification, which loosely refers to the use of game design techniques in non-game contexts, has been around for a few years. Recently, it has become a bona fide buzzword – labelled “the next big thing” – and a way for companies to exploit the popularity of video games and the ubiquity of mobile devices.

Top business schools are now beginning to introduce classes on the subject, while others are “gamifying” aspects of their courses.

“The term itself might be a fad but the underlying principles are going to endure,” according to Kevin Werbach, a professor of legal studies at Wharton. Prof Werbach teaches three separate classes on gamification, including a massive open online course (mooc) on Coursera, which drew 80,000 students from more than 150 countries.

“Think about social media in the last five years or so. It was dismissed as a fad. But I think now pretty much every company today recognises that social media is an important mechanism for them to engage customers.”

Games for a purpose

In 2008, researchers at the University of Washington launched a protein-folding online puzzle competition that harnessed the brainpower of video gamers to solve medical challenges.

The game, Foldit, requires players to tinker with proteins and connect amino acids to identify their best possible “folded” states. Scientists evaluate the highest scoring “folds” to see if the solutions can be applied to real proteins. Essentially, the game crowd sources scientific discoveries to help find cures for diseases.

Gamers have already made significant scientific contributions. Last year players helped reveal the configuration of an Aids-related enzyme – a problem that had stumped researchers for more than a decade. The discovery will help scientists develop drugs to fight HIV and Aids.

“This is what counts as an epic win,” says Jane McGonigal, a game designer.

Prof Werbach, author of For the Win, describes gamification as “approaching problems from the perspective of a game designer to tap into the psychology of motivation”.

“It is not limited to a specific industry, business function or type of organisation and many companies are doing gamification without even realising it,” he says. His course teaches students how to apply gamification to business areas such as human resources, sustainability, innovation, customer engagement and marketing.

“Marketing is an easy application for games. There is a straight line between customer engagement and enthusiasm to revenue generation.”

The amount of money that companies spend on gamifying their products and services is projected to increase. According to M2 Research, the California-based technology research company, business spending on gamification will rise from an estimated $242m this year to $2.8bn in 2016.

“In the future there’s going to be a lot more game elements in our lives – in user interface, business software, even in our cars,” says Karl Kapp, a gamification consultant.

A well-designed game responds to something deep in the human psyche, says Jane McGonigal, who has developed large-scale games for organisations such as the World Bank, including a simulation about the challenges of a worldwide oil shortage. “Games are not easy. They’re about being challenged. They fulfil a psychological need and they give us the feeling of mastery and success.”

NikeiD, a service provided by Nike, uses game mechanics that enable customers to design their own pair of shoes. They customise the material, colour, size and stitching – a process that transforms the act of buying new tennis shoes from a transaction to a creative experience. Sephora, the cosmetics chain, has created an online community where customers become “make-up experts” and are promoted within the group based on the quality and popularity of their advice.

“What [companies and organisations should be trying to promote is the] social element and the shared experience that a video game provides,” says Ms McGonigal. “[Sephora] is not necessarily saving the world but it is giving people a feeling that they are an esteemed member of a community and they are needed.”

Some schools are using gamification techniques in the classroom.

Steven Johnson, an assistant professor of management information systems at Temple’s Fox School of Business in Philadelphia, uses video-game elements in his social media innovation course to motivate students. The course is portrayed as a “quest”, where students can earn points for different activities, such as commenting on a blog, and collect badges at particular levels. Each week Prof Johnson recognises those students who have climbed a level with school-branded memorabilia such as T-shirts.

Video games are a familiar learning tool for the “millennial generation”, a tech-savvy crop of students. “They are digital natives, says Jaime Castello Molina, a lecturer of marketing at Esade in Spain. “They are used to these kinds of tools and environments. But I also think it’s a better way to teach and a better way to work.”

Prof Molina has created a course about strategic sales management that features a video game. The game creates a virtual world where students face business dilemmas similar to those presented in case studies.

As players, they gather information and determine, for example, the best way to maximise profitability, or which customer segment to target with a new product or offering. The game allows students to experiment with different decisions and shows them how their choices affect business outcomes in multiple ways.

“We want to engage them and we want them to keep playing,” says Prof Molina. “They’re practising concepts, working with new tools and still having fun.”